Advisory

INVESTING IN STOCK MARKET

To trade in the stock market you need a trading as well as a demat account. The process is not as complex as it looks to some of us. All you need is to understand the basics. Read on to know more.

Words: SANGEETA SINHA

To trade in a stock market you need demat and trading accounts. Demat (dematerialized) account is mandatory for trading in stocks. It is through a trading account that you buy or sell shares, while a demat account is like a bank where you deposit your shares and sold shares are taken from. Some banks offer the facility of saving, demat as well as trading at one place.
Now before we go into the details of trading and demat accounts let us understand what stocks are as explained to a layman. In simple words once any company lists on stock market, the shares of the company become available

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for trading on the stock exchange; just get registered with the stock exchange and start trading. Opening a trading account is simple; it can be done online through a broker. It is important that you select a good broker because expertise is crucial in stock market as within minutes rates change. It is a good idea to compare brokerage rates but it is advisable to go for brokers who provide good service rather than ones who charge you less. Once you decide on the broker contact them, fill up the forms, submit the necessary KYC documents and get ready to start trading in the stock market. After verification of your application you will be given your trading account details.
So with your trading and demat account in place you can easily do your trading. Make sure that you link your trading and demat accounts so that you avoid providing demat account details every time you trade.

Process is simple, place your order (buying or selling) through your trading account, the stock exchange will process and verify your order and then the shares will be either debited or deposited in your demat account.

INVESTOR VS TRADER
The goal of an investor and a trader remains same – trying to make profit in the financial markets, but the methods differ. The process of investing and trading differ in the way one operates; investing involves holding on to the investments for long periods of time taking advantage of interest, dividends etc. while trading involves regular buying and selling of stocks.
SOME HANDY TIPS

» Before planning to invest in stock market make sure you have some security money in case of any emergency

» Choose a good broker

» Don’t get carried away by advise given on whatsapp or Facebook, do your own study and invest

» Learn to time the stock market; don’t get carried away by short gains

» Review your portfolio at regular intervals

» Don’t allow your broker to trade; signing forms blindly and handing over to your agent may backfire

ASK THE EXPERT

Manoj Chaturvedi has rich experience of banking having worked both in India and Europe during last 16 years. Presently he is working with HDFC Bank Limited as Deputy Vice President in Wholesale Credit Risk. He is by qualification an MBA from XLRI, Jamshedpur and LLB from Faculty of Law, Delhi University.

What is Depository and Depository Participant (DP)?
A Depository is in fact similar to banks, where securities are held in electronic (dematerialised) form. In India, we are having two Depositories -National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL).

Depository Participant (DP) is the place, where shares in physical form used to be deposited for the dematerialization purposes i.e converting the same to electronic form. DP is very akin to the bank branches.

Is it mandatory to dematerialize the physical share certificates?
No, it is not mandatory to dematerialize the physical share certificates. But all features of demat now can be accessed on mobile banking and easy to operate. Bonus / right shares gets easily credited to these account and transaction cost is also lower than it used to be in physical forms.

Can a person have more than one demat account in his name?
Yes, a person can have more than one demat account in his name; there is no restriction on that. An investor can open more than one account in the same name with the same Depository Participant (DP) or different DPs provided all KYC documents are submitted.

Can a demat account holder authorize another person to operate the same? If yes then how?
Yes, a demat account holder can authorize any person to operate his/her account by executing a power of attorney (POA) to this effect.

In case, any demat account holder wants to re-operate the account on his own, it can be done after having revoked the POA in writing.

Can I transfer shares to another demat account?
Yes, it is very much possible to transfer shares between demat accounts. The duly filled slip has to be submitted to the concerned DP and the transfer is done by NSDL or CDSL after receiving the document forwarded by the DP on behalf of the client. But the shares transferred from and the shares transferred to should fall under the same depositary i.e NSDL to NSDL and CDSL to CDSL.

I have some non-demat shares. How do I transfer them to demat account?
Open a demat account in the name of the person who has shares in the physical form and then ask the broker to demat the physical shares.

Can I have a joint trading account?
A trading account is always a single account that means there cannot be a second holder for a trading account, though you can have a nominee for a trading account. You can have demat account with a second holder and link multiple demat accounts to a single trading account.

Can I have multiple trading accounts?
Yes, you can have multiple trading accounts though not with the same broker. Though a second trading account would give you different trading platforms but it will add to your account opening charges and you will also have burden of keeping track of two accounts.

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CAUTION IS NEEDED

» It is important that you have understood the terms and conditions of the demat agreement before opening an account. Often people give power of attorney (POA) to their broker which he/she can misuse.
» Read all clauses properly before you give any POA or other instructions to your broker.
» Always keep your DIS in safe custody; every broker has to provide their client with a pre-numbered book-let.
» Check that your DIS book is in a serial order; in case of any missing page get it changed.
» DIS has to be filled every time a transaction is done; don’t give blank signed slips to your broker as it can be misused.
» You can protect your account by using the freeze option.

EDUCATION LOAN It’s simple, provided you are aware of all options

Planning to take education loan…read on to get the basics of this facility before you venture out in the market

WORDS: SANGEETA SINHA

Getting education loan is not very difficult as banks do not discriminate between toppers or average students. All that a bank looks for is that you have a strong guarantor and your documents are in order. The student should have an inclination to learn and should have the potential to repay.
Education loan options are plenty and even government is making efforts to make it simpler and easier for students. But before you finally apply for this loan you need to be clear in your requirements.

The most important point is to be sure about the loan amount you would require. The expenses would not only include the course fees but all other costs like travelling, boarding, food, books etc. Check out your own savings and then decide on the loan amount you would require. Students planning to study abroad should check on the currency rate too. Many banks/financial institutions offer loan for full expenses, so if you wish to take loan for all expenses look for banks which cover all.
Once you are sure on the loan amount, the next important point would be to compare the interest rates. Do your homework well and also figure out whether the interest amount will be invariable or will it change according to market trends.

And most important never default in your payments of education loans. If you do that you may have problem getting other loans in future as banks may mark you as defaulter. A default will spoil the credit score of both the student as well as the parents (co-borrower). If your EMI gets over due for more than 90 days the bank classifies the loan as a non-performing asset. In case of higher loan amount (more than 7.5 lakh) even the collateral will be at risk.
Repayment usually starts after the ‘moratorium period’, that is usually one year after end of your course or six months after the job whichever is earlier. You even have the option of repaying your interest during the study period; this helps lower the EMI. Some banks even give concession to those paying interest during the moratorium period. It is always a good idea to be prepared with a repayment strategy.
Though banks usually grant loan based on the capacity to repay; employment potential of the student is checked but still it may happen that you are not able to get a job. In such a scenario banks have policies for tenure extension but it may be little difficult to convince. As per the guidelines, the tenure can be extended up to 10 years for loans up to Rs 7.5 lakh and 15 years for loans above it.

Extension is also allowed in case the student takes up higher studies immediately after completing the course or if the student is unable to complete the course on time for reasons beyond his/her control.
It is also a good idea to take loans in installment because banks charge interest on the amount of money disbursed. If you have to pay fees semester wise then it will be smart move to take loan when required so that you save on the interest that accumulates.
Lastly, keep all documents related to loan in safe custody.

VIDYA LAKSHMI

Vidya Lakshmi is a first of its kind portal for students seeking Education Loan. This portal has been developed under the guidance of Department of Financial Services, (Ministry of Finance) , Department of Higher Education (Ministry of Human Resource Development) and Indian Banks Association (IBA).The portal has been developed and being maintained by NSDL e-Governance Infrastructure Limited. Students can view, apply and track the education loan applications to banks anytime, anywhere by accessing the portal. The portal also provides linkages to National Scholarship Portal.


Now that your loan amount and the interest rate are finalized, it is time to decide on the repayment time. Longer repayment tenures will help if you want low EMI but keep in mind that in case of longer tenure you will have to pay more interest. Make the down payment keeping in mind your budget and paying capacity; certain percentage is decided by the bank which you will have to pay mandatorily.

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SCHOLARSHIP AND LOAN

Education loan sanctioned by any bank remains independent of any scholarship. You are free to apply for any scholarship even after you have the loan sanctioned. The extra in the form of scholarship will help in reducing the loan burden.

ASK THE EXPERT

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Pushkar Karni Sinha, Senior Associate with Legal Consultus, a New Delhi based Law Firm, specializes in Civil, Corporate and Consumer Laws. An alumnus of National Law School, Jodhpur, he practices in the Supreme Court of India and Delhi High Court.

1. How much loan amount can I get?
It depends from bank to bank. However, the banks in India are providing need based education loans. For example, few banks are even providing education loan up to INR 1.5 crores for pursuing higher studies abroad (subject to compliance of Exchange Control Regulations).

2. Any guidelines to students applying for education loan.
The education loan applicants should approach the nearest branch of their choice, preferably where the loan seekers are having their bank account, along with requisite documents. This minimizes the queries with respect to the credentials of the applicants.
Generally, the Applicants need to furnish the following documents along with the completed application form of the student, guardian (when the loan is jointly taken) as well of the guarantor (as the case may be):
» Mark sheet of last qualifying examination for school and graduate studies in India
» Proof of admission to the course
» Schedule of expenses for the course
» Scholarship documents, if any
» Passport size photographs
» Statement of bank account for the last six months of borrower
» Income tax returns
» Government approved proof of residence

3. How is the educational loan disbursement made?
The loan has to be disbursed in stages as per requirement/demand directly to the Institutions.

4. Does education loan also include travelling and other expenses like food, boarding, books etc or only the course fees?
It depends on the bank policies. Some banks even include two wheeler loans in an education loan with some maximum cap.

5. What is the age criteria required while applying for an educational loan?
There is no ‘minimum age criteria’. However, in case of minors, loan will be jointly in the name of parents and the student shall ratify the borrowing by acknowledging the debt on attaining major status i.e. 18 years of age.

6. Is there a penalty for pre-payment?
No prepayment penalty will be levied for prepayment of loan any time during the repayment period.

7. Is education loanee ‘a consumer’?
Yes. A loanee does come within the definition of ‘a consumer’ as defined in the Consumer Protection Act, 1986. An aggrieved loanee may also approach the Consumer Fora under the Consumer Protection Act, 1986 for the redressal of one’s grievance against such Insurance Company.

LOAN CONDITIONS

• A co-applicant is a must, could be a parent or a sibling
• Loans below 4 lakhs do not require a guarantor
• Loans above 4 lakh need a third party guarantor
• Loans above 7.5 lakh need a collateral
• Insurance is mandatory to study abroad
• For studying abroad it is better to look for part time job or sponsorship as the loan amount may not be sufficient.


SOME HANDY TIPS

» Ensure that you have conditional offer of admission before approaching banks
» Look for a bank that offers best moratorium period, less interest rate and customer friendly terms
» Make sure that there are no penalties for prepayments or part payments
» If you have the capability, then it is always a good idea to go for short tenure and higher EMI rather than long tenure with low EMI
» Long tenure loans get expensive as you end up paying more interest
» Try paying the interest part during the moratorium period so that you have less burden later
» Opt for loan in installments so that you save on interest
» Try clearing the loan as fast as possible; use any extra money you earn to make part payments on loan so that you save on interest
» It is better to finish loan in first 8 years if you wish to avail the tax benefits on the interest you pay on your education loan
» The deductions are available only for the initial assessment years and seven years after
» Never default on paying your EMIs; it will hamper your as well as your co-borrower’s credit opportunities later
» And lastly don’t go by the false promises of agents
» Keep all documents handy including guarantor’s financial documents

RERA: Seeking Transparency

RERA or the Real Estate Regulations Act seeks to protect homebuyers and redress grievances as well as help boost investments in real estate industry

Words: TILLANA DESAI

Early last year, the RERA act was passed by the parliament and the Union Ministry of Housing and Urban Poverty Alleviation to formulate and notify rules for the functioning of a regulator. With an aim to bring about clarity, transparency and fair practices in the real estate industry, RERA will protect the interests of buyers and penalise errant builders.

KEY PROVISIONS OF RERA

The promoter of a real estate development firm must maintain a separate escrow account for every project. A minimum 70 per cent of the money from investors and buyers will have to be deposited. This money can only be used for the construction of the project and the cost borne towards the land.
 Buyers must be kept informed about developments of projects for their clarity
 Builders will have to submit original approved plans for their ongoing projects and any alterations that they make. They also must furnish details of revenue collected, where and how the funds were utilised, the entire timeline of the construction, completion and also the delivery certified by an Engineer/Architect/practicing Chartered Accountant.
 State regulators will register real estate projects and agents operating under RERA. These details will be open for public to access on web.
 Any reported issues in services will have to be rectified by the developer in 30 days.

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 Developers can’t invite, advertise, sell, offer, market or book any plot, apartment, house, building, investment in projects, without first registering it with the regulatory authority. Post registration, all the advertisement inviting investment will have to bear the unique RERA registration number which will be provided project-wise.
 After registration, developers will furnish details of their financial statements, legal title deed and supporting documents.
 If the promoter defaults on delivering the project within agreed deadlines, they will be required to return the entire money invested by the buyers along with the pre-agreed interest rate mentioned in the contract based on the model contract given by RERA.
 If the buyer chooses not to take the money back, the builder will have to pay monthly interest on each delay month to the buyer till they get delivery.
 Developers cannot ask more than 10 per cent of the property’s cost as an advanced payment for booking before signing a registered sale agreement.
 Any errant builders with complaints registered against them can be imprisoned for a project for up to 3 years.

EXPERTS SPEAK

The Editorial Team of Urban Vaastu asked a few industry experts their views on RERA.

advisory2Rahul Saha Sr. Town Planner and Architect Urban Development and Urban Housing Department Government of Gujarat

“The much talked about RERA Act has been long awaited.
I hope it will bring the much-awaited transparency and no discrimination in the Real Estate Market.
It should definitely be beneficial and bring encouragement among the genuine buyers and the end users who till now have always remained helpless and in doubt due to the volatile nature of the property market.
The Regulatory Authority will be set up at Central and State Levels, however it will be interesting to see how various sections of the Act are actually implemented as many sections do not favor existing Property Players.
There can be nothing better if the ‘Consumer First’ approach can be achieved in true sense.
The best part is that buyers will pay only for the carpet area.

Builders will also have to maintain higher construction quality and keep better checks.”

advisory3Sahil Kapoor Executive Director RE/MAX India
RE/MAX is a member of the NAR (National Association of Realtors) and is one of the largest real estate consultant groups globally.
RERA is a great move in the right direction for end users, however, its implementation is the key. While Land laws come under the central government, RERA is state governed. A lot of confusion is thus caused. Unless it too is directed under Central laws, RERA will get diluted.
For example, the law was set to be implemented by the 1st of May 2017, but wasn’t and ongoing projects executed nevertheless. Thus, buyer’s interests may not be safeguarded. The state government must take strict and drastic steps to protect the interests of end users – which is actually the whole idea behind RERA. The act which should ideally have been implemented on day one itself irrespective of the status of the property.
RERA has the potential to bring in a great revolution and stop all the wrongly inflated prices of the property if enforced correctly. Why are properties more of an investment these days? It is simply because of this false inflation. With RERA, end users will be able to purchase properties for their use and not just as an investment.
In China for example, whole ghost cities were created due to false inflation. To avoid this happening in India, RERA is the key.
ASK THE EXPERT

Keyur Patel, CEO, Valencia Group

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With RERA, there will be a mandatory disclosure of project details, including those of the promoter, project, land status and clearances. This will increase the credibility of developers and protect consumer rights as well. So it is positive for industry transparency. These initiatives will contribute to organizing this sector that has been traditionally fragmented and unorganized while improving consumer confidence. The guidelines given in RERA are of prime importance for everyone related to real estate business as they will ensure complete transparency and discipline in the sale or purchase of a property. So on time possession, pay for what you get, construction warranty and many more trust factor for both ends is what one gets.

Property LOAN CLOSURE

Loan closure formalities are very important; make sure you don’t miss any point.
You paid your last EMI. What a relief, but did you bother to collect your NOC? If you did not do it you may get into trouble later. NOC is a must and needs to be collected and preserved for any future reference. Read on to understand the significance of loan closure formalities.

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JUST because you have paid full loan amount to the lender doesn’t mean that you are free. It is important to settle the records completely so that your records are straight and in future you have no issues getting another loan.

NO OBJECTION CERTIFICATE (NOC)
It is important for you to have NOC from the lending institution. No Objection Certificate is a document which states that you have no dues or outstanding against your name and this document is required when you approach any other bank for financing.

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CHECKLIST FOR PROPERTY LOAN CLOSURE
» Make sure you collect all original documents you submitted
» The documents should be in good condition
» Don’t forget to collect NOC
» Make sure that CIBIL is informed about the loan closure
» Get all liens removed after loan closure
» Get the new encumbrance certificate

NOC is a legal document mentioning that you have paid all dues to the lender. This certifies that the lending institution has no legal rights over your collateral. The document clearly mentions your name, account number and address of your property.

Make sure you get this document from your lender once you have paid the complete loan amount. Sometimes the NOC is dispatched to your mailing address and if your address has changed and you have not updated your address with bank there are chances of missing this important document. Though as a rule the lending institutions should give you NOC but often this step is not taken seriously and this may put you in trouble later.

NOC is important for your own safety too. In case the lender loses record of your loan closure they may send you letter to repay and this will put you in unnecessary hassle. NOC being with you can help to settle matters easily. So finally, the onus lies with you that you have this document with you.

COLLECT YOUR DOCUMENTS
You need to collect all your original documents you submitted with the bank or the lending institution. Make sure that all the pages are intact and in good condition; check important pages like sale deed and others. It is a good idea to collect the original papers personally rather than getting it through mail. That way you can personally check all the pages before acknowledging the receipt of documents.

KEEP CIBIL UPDATED
NOC is important for your financial credibility. Credit Information Bureau (India) Limited (CIBIL) needs to have your record straight and if NOC is not submitted to CIBIL, it will show your records with unpaid loan amount which will adversely affect your credit score. Make sure that the information gets updated on the CIBIL website.

GET YOUR LIEN REMOVED
This is a very important step which should not be forgotten – getting the lien on the property removed by the registrar’s office. You will not be able to sell your property if the lien is not removed. First check with the lender if a lien has been put on your property.

ASK THE EXPERT

advisory3 Vivek Singh, Advocate-on-Record, Supreme Court of India is an alumnus of Campus Law Centre, Delhi University and has 15 years’ experience at Bar. He is Standing Counsel for the State of Uttarakhand.

What is an NOC (No Objection Certificate)?

An NOC is a clearance certificate issued by the financial institutions/lender assuring that all dues have been cleared. This is one of the most important documents at the time of closure of a loan account. This certifies that the lending institution has no legal rights over the property on/for which the charge/mortgage/hypothecation/lien was created.

What precaution one can take at the time of receiving No Objection Certificate?

No Objection Certificate should clearly mention the address of Property against which loan was taken, Name of Borrower & Loan Account Number of the Borrower. Secondly, it should state that all the dues have been paid by the Borrower and Lender does not have any rights or claims on the Property. It is further advisable to collect all the original documents submitted to lender at the time of taking the loan and as well as the security cheques to avoid its misuse.

What kind of problems can I face if I don’t have an NOC?

NOC, from the previous lender with respect to a property, is a fundamental document before applying for a fresh loan facility. Borrower, who doesn’t provide No Objection Certificate in proper format, will not be able to get any further loan on the same property. Further, at times, lender also fails to send the requisite loan closure information to CIBIL, which may affect further loan prospective. In such a situation, No Objection Certificate becomes very handy to get the CIBIL record corrected and hassle-free. So, it is always advisable to secure such an important document at the time of closure of loan account only.

What is the significance of Encumbrance Certificate?

This is an indicator that whether there is existing loan facility availed on the respective immovable property or not. The same can be obtained from the Office of the Registrar of Property of the concerned area where the property is situated after making certain statutory fees.

A lien is a legal right granted by the owner of the property; it serves as a guarantee that in case the creditor does not pay the loan the bank can seize the property and if the loan is paid in full then the lien is released.

The procedure for getting the lien removed from property is different for registered properties and unregistered properties. For registered properties, you will have to get it done through the registrar’s office. A bank official will accompany you to the Registrar office to terminate this lien.

ENCUMBRANCE CERTIFICATE (EC)
Encumbrance certificate is a document that lists all the financial transactions performed on the property. This certificate should clearly reflect the closure of loan and lien removal. If it does not show get it done through the registrar’s office. Get hold of new updated EC; it is very important and should not be neglected at any cost.

e-filing of Income tax returns

Filing of ITRs is not as complex as it is perceived. Since it has to be done every year, after the close of financial year and before the due date, it is better to understand the basics so that you don’t have to run around to get it done.Words: Sangeeta Sinha

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Most of us wait till the last date to file our return of income and it often adds to lot of stress, running to banks and tax consultants. But if you keep your records straight along with bank statements and Form-16, it can be a simple affair. Why not do it yourself; just log in to the Income Tax department’s e-filing portal for e-filing your return of income.

As per the Finance Act, e-filing is now mandatory for any assessee filing ITR 1/2/2A having a refund claim in the return of income or having a total income of more than Rs 5 lakh. This has to be furnished electronically with or without digital signatures or by using an electronic verification code.

POINTS TO REMEMBER

Check Form 26 AS- Form 26AS is an annual statement disclosing the details of tax credits (Tax deducted at source (TDS), Tax Collected at Source (TCS), Advance Tax or Self Assessment Tax or payment of Tax on regular assessment) in the account of an assessee as per the database of the Income Tax Department. The assessee needs to verify the tax credits claimed in his return with those appearing in 26AS before filing his return of income; mismatches could lead to incorrect tax computation and assessment by the department. Income Tax Department generally allows a taxpayer to claim the credit of taxes as reflected in his Form 26AS.

Investment documents- In case you miss out submitting investment proofs to your employer on time you can still claim these while filing your tax returns. Make sure that you fill the specific schedules in the tax returns relating to those documents. You can also claim deductions under under Chapter VI-A even when these have not been shown in Form 16 by your employer.

Alert- Never open phishing mails or download any attachment which is not from a trusted source.The Income Tax Department does not ask for your personal information through e-mails. It also does not send e-mails requesting your PINs, passwords or similar access information for credit cards, banks, etc.
Documents needed- Make sure you have last financial year’s tax returns, bank statements, TDS certificates, investment details, insurance details, loan papers and also balance sheet and audit reports wherever applicable.

Updated system- Most important your system must be updated with Java Runtime Environment Version 7 Update 6 or above in case where you are using the downloaded Java utility for filing your tax return.

Name mismatch- Make sure that the name in you PAN card matches exactly with the name in your bank account and other official statements because even a minor mismatch may create a problem. The portal will consider you as a different individual.

expert views

Vikas Srivastava is a practicing member of the Institute of Chartered Accountants of India. He is a partner with a reputed firm of Chartered Accountants and has over 14 years of experience in the fields of auditing & taxation.

Who should file income tax returns?
Filing of Income tax Returns is a legal obligation for every person whose total income for the previous year has exceeded the maximum that is not chargeable to tax under the provisions of the Income Tax Act, 1961.

Is it mandatory to file Income Tax Return after getting Permanent Account Number (PAN)?
No, the liability to file income tax return is governed by various provisions under the Income Tax Act, 1961. Filing of income tax return becomes mandatory when the total income of a person under different heads exceeds the maximum limit prescribed by the Income Tax Act, 1961
Can a return be filed after the due date?
Yes, an assessee can file a belated return within a period of one year from the end of the assessment year or before the completion of assessment, whichever is earlier. With effect from 1st April 2017, belated return for assessment year 2017-18 and onwards can be filed at any time before the end of relevant assessment year or before the completion of assessment whichever is earlier.
Can a belated return be revised?
A belated return cannot be revised. However, with effect from the assessment year 2017-18 and onwards a belated return can also be revised.

What precautions need to be exercised while filing your return of income?

  • Your return of income should be filed on or before the due date of filing.
  • The assessee should download Form 26AS and reconcile the TDS appearing therein with the actual TDS and sort out the discrepancies.
  • At present no documents are required to be attached with the return of income. However, the assessee should carefully compile and arrange documents such as Form 16, Form 16A, his updated bank statements, interests certificates, investment proofs, books of accounts, Profit & Los a/c, Balance Sheet, etc. so as to enable him to correctly disclose his income and file return properly.
  • The assessee should correctly identify the Form of ITR applicable in his case.
  • The assessee should carefully fill the ITR Form following the instructions contained therein.
  • If any tax is found due as per the return of income, the assessee should first pay the tax due otherwise the return of income would be treated as defective.
  • In case the return of income is filed electronically without the digital signatures and without the electronic verification code, the assessee needs to send the ITR-V duly signed by him to CPC Bangalore either by Speed Post or Ordinary Post.

What should I do if my tax deducted does not match with the amount in Form 26AS?
Every person deducting tax at source has to file TDS returns with the Income Tax department covering the details such as name of the deductee, PAN of the deductee, amount paid to the deductee, amount of Tax deducted,

At times it happens that the actual TDS and the TDS as per Form 26AS does not match.

This may be due to non filing of TDS returns by the deductor, incorrect information filed in the TDS returns related to the deductee, etc. Normally, the Income Tax department allows credit of TDS appearing in Form 26AS of the assessee.

In cases where the TDS as per Form 26AS is less as compared to actual TDS, the assessee should approach the deductor to get it rectified.

The assessees are, therefore, advised to reconcile the actual TDS with that appearing in Form 26AS before filing their return of income.

If a person dies before filing his return of income then who files the return?
Legal Heir of the deceased assessee can file the return of income and can view IT-V acknowledgement, the status of income tax return and other filing status related to the deceased assessee.

Do I need to declare assets and liabilities too?
All assessees whose total income in any financial year exceeds Rs 50 lakhs need to fill Schedule AL in the return of income mentioning therein the value of their Immovable Assets – Land & Building, Movable Assets – Cash in Hand, Jewellery, bullion, Boats, Yachts, Aircrafts and also the liabilities in relation to these assets.

TERM INSURANCE Secure your family’s future

If Term insurance has its advantages it has some limitations too. Understand your requirement as well as the plans before you buy any kind of insurance.

Words: Sangeeta Sinha

Term insurance provides coverage for a specific period of time; coverage is provided if the insured dies during the specified term. It is a pure risk cover where both, the amount as well as the term, fixed; and that is the reason it is simpler to understand compared to policies which combine risk cover with savings.

Without investment component, premiums are low compared to other policies. Full premium goes for risk cover with no survival or maturity benefit. However, there may be some plans that have schemes to return premium paid.

Depending on current terms and conditions renewal rate may not be the same. In case of new illness same rate may not be applicable. In such cases a whole life insurance may work better as it provides cover for lifetime.

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Do homework well as some policies offer option of renewing term policy with simple medical proofs etc. Check the options companies offer upon expiry of term insurance. Before you invest in term insurance understand that term insurance is not for wealth creation; it will not help your family while you are living. You cannot surrender this policy nor can you avail any loans against this policy.

It is advisable to invest in term insurance at an early age because beyond a certain age it is difficult to buy it.

Survival Benefit

And sometimes even if you get it, there might be clauses and conditions attached which may not be advantageous.Generally, term insurance plans don’t offer maturity benefits. However, many companies have plans which offer to return premium amount once policy expires.

It is called Term Return of Premium (TROP) and the premium for such plans are slightly higher compared to standard term insurance policies. This is popular amongst the investors as they have the assurance of getting the premium money back if they survive.

Apart from this certain companies also offer additional optional benefits for critical illness, accidental death, permanent disability etc. The benefits can be added to the term plan by paying additional premium

BASIC POINTS

Cover Size – Make sure sum assured is large enough to cover basic needs of one’s family.

Tenure – Consider age and responsibilities before deciding on the tenure. No good if plan terminates early and you may not be able to get another one at that age. Ideal if policy lasts till 60-65.

Company Repute – Insurance generally long term contract; make sure the company strong enough to last that long.

Go Online – Good idea to go online. Online plans come a bit cheaper. Of course with no agents to remind you of premium dates you have to be alert that your policy doesn’t lapse.

Inflation Factor – Keep in mind inflation reduces your cover. Some companies offer plans where sum assured increases every year. Check before you invest.

Single Premium – Single premium works for people with irregular income.
You remain safe and there is no possibility of defaulting. However if the insured dies earlier then the premium paid for rest of the years go waste.

TERM VS ENDOWMENT

Term insurance is pure risk cover instrument while endowment involves both insurance and investment. Term insurance has no maturity benefit while benefit is paid at the end of policy period in case of endowment. In simple words term insurance is associated with only death benefit while endowment involves both death and maturity benefits. Ideally the need of insurance should be kept separate from the goal to invest and grow money. Be clear about your financial goals and intention before you decide to take insurance. Premiums for endowment plans are mostly higher than those paid for term insurance. If your primary need is protection, then term insurance a good idea. Endowment a second option if only you are looking to make your money grow.

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Expert views

A corporate trainer Kaushik Chatterjee has over 15 years of experience in Sales, Relationship Management, Training & Development and Team Management. He has been into Life Insurance Domain training for over 13 years. Based in Kolkata he presently is with Kotak Mahindra Old Mutual Life Insurance Company Limited as Assistant Vice President & Head – Zone Training (East & North East).

Why should I invest in term plan?

Buying life insurance is to compensate financial loss arising out of sudden demise of an individual who may be sole bread winner for his family or could be a key person in an organization or a partner in a partnership firm and the demise could affect other partners putting a dent into running of business. Liquidating the business too can be difficult without selling off, in case adequate cash is not available. In such a scenario, best to buy term plan. Similarly, at early age when a person begins his career and doesn’t have enough income to pay large premiums for other investment oriented life insurance plans like endowment or money back, he can choose to buy a term plan for one-fourth or one-fifth the normal premium and get risk covered. It holds true for individuals in today’s lifestyle where we take on lot of liabilities like home loan, personal loan, car loan, and other such loans and God forbid if the person who took the loan dies. The entire loan needs to be repayed and it would be easier if the same is covered through enough sum assured at a low premium, as a similar endowment policy with high sum assured would be just too expensive and out of reach of the individual.

Does term insurance also provide protection against critical illness, disability, etc.?

Term insurance does not provide critical illness or disability benefit since it’s not inbuilt into the product. But the policyholder can choose to attach riders along with his term plan policy if he so desires by paying small rider premiums. Such riders are available but they cannot be purchased as standalone but need to be opted at the time of purchase of policy. Some popular riders are critical illness rider, permanent disability rider, accidental death benefit rider, waiver of premium rider and payor rider (for minor or Juvenile Policy)

How competitive are the pricing and how does one compare?

Term plans are competitive and pricing varies from company to company. Also, within the same company one can choose from online or purchase through a life advisor. Price depends also on health risk of individuals. Hence premium for a smoker and nonsmoker varies. Pricing depends on three aspects, i.e., expense of the insurance company to distribute the product and service it, the mortality/morbidity rates experienced by the company at a particular age group and the additional premium also called loading in case of an unhealthy life. The additional premium is dependent and can only be known after one has applied for a term policy and post medical and financial underwriting.

Best way to compare pricing is to go online and one can use websites like policy bazar etc. where the comparative premiums are shared for most of the major life insurance companies. One can also call the life advisor of these companies. One thing that needs to be looked into is the claim settlement experience of the life insurance company that you are planning to purchase the product from. Cheapest need not be the best.

Will I get tax benefits?

Yes, as per the Income Tax act of India all Life Insurance Premium is allowed deduction under Sec 80 C. and all proceeds from life insurance policy are tax free under Section 10(10)D.

Please give tips on selecting right policy.

Life Insurance Policy is important financial tool and needs to be chosen wisely and correctly. It is hence important that the life advisor advises his client the best possible solution for his benefit.

Life Insurance as a product is for long-term Savings and Protection. It is not for short-term investment for which there are numerous financial instruments available including bank fixed deposit and post offices.

Life Insurance Plans help in planning for long-term needs such as children’s education, daughter’s marriage, for other needs in various stages of life and for retirement, with enough cover to ensure that the very reason for purchasing a life insurance plan is met even if the policy holder is not alive.

There are different types of products for different needs. Plans available in market, like term plan (pure protection), Endowment Plans (fixed term with lump sum maturity amount after end of term), Money Back Plans (Fixed Term with Payout at fixed intervals and a maturity value at end of term), Annuity Plans (Deferred Annuity – Fixed Payment term with Pension Paid from the chosen retirement age), Immediate annuity plans- Pay one time lump sum premium and the annuity (pension) starts immediately. Whole Life Plans – Risk cover for entire life or at 100 whichever early with maturity age being 100. So a policyholder can choose a traditional plan which guarantees return at low rates to a Unit Linked Plan which has high return but volatile and depends upon the equity exposure in market.